Don’t Trust the Sun

A couple of months ago, I was in the middle of one of the most unusual short sale transactions I have experienced in the last four years. In this particular case, I was representing the buyer. This was the listing agent’s first short sale transaction.  So after explaining my experience with both the listing agent and the seller, the seller authorized me to assist in negotiating with the banks.

The seller was legally an LLC, not an individual. It is relevant, however, that the Lender’s negotiator was a vice president at a local Bank similar in name to the title of this blog, rather than the national 1-800-number. With the exception of dealing with this negotiator, throughout the transaction all had gone well and smoothly.  Nothing interesting in any way, unless you are one of the parties to the transaction.

What made this blog worth writing was the negotiator. Again, this is a vice president. This negotiator would only talk with the Seller. He literally refused to put one word in writing stating that the only thing he will do is sign the HUD-1 after the transaction is closed, if it meets his agreed criteria. On the other hand the underwriters for the buyer’s loan would not give their approval without something in writing saying that the closing would remove all liens from the property – and the only piece of paper missing was from this vice-president.

A vice-president in charge of loans at a major bank cannot have that position without understanding the requirements of the underwriting department. It is not possible for this person not to understand that without a written document approving the removal of the lien, the underwriters will not release the loan.  He must understand that the closing table is dominated by attorneys, and no attorney will believe the spoken word of anybody — it must be in writing. So, we are at an impasse.

Of course, as you would expect with such a strange reaction, there was a back-story that we did not know until just before the end.  The bank was negotiating a multi-faceted lawsuit with the managing partner of the LLC which included a large cash settlement.  We got our one-sentence approval the day that VP got his $55,000 cashier’s check.  It became very clear to us that this was the bank’s intended strategy — to use the pressure of the delayed and re-delayed closing to force the seller to respond to the lawsuit settlement.  This does not excuse, however, the downright rude attitude of the executive representative of the bank. It also underscores the fact that lenders will do whatever they feel they need to do in order to achieve their results, with no regard to what is ethical or fair to the other parties of the transaction — such as giving us a clue of what was going on earlier in the process.

Although it turned out well for all parties in the end, I am always interested in suggestions that might have avoided all of the stress on everyone involved in the transaction. And in the meantime, if any of you run across a negotiator who refuses to put anything in writing, maybe this blog will give you the clue I was missing all along.

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